The net profit of Bangladesh's banking sector has suffered a major setback in the year 2024. According to a new Bangladesh Bank report, the combined net profit of all public, private, and multinational banks declined by about Tk 2,700 crore compared to 2023, representing an 18 percent fall. The report shows that while banks recorded higher income from interest and investments, the accumulated losses of a few troubled banks dragged down the profitability of the entire sector.
Profit Growth in Income, But Overall Decline: Despite the downturn in net profit, revenue streams within the sector actually expanded. In 2024, interest income rose by 24 percent, and investment income grew by 30 percent. Several banks also reported record-breaking profits, especially multinational players.
For example, Standard Chartered Bank reported Tk 3,300 crore in net profit, the single highest figure in the sector, while HSBC posted Tk 1,860 crore. On the domestic side, BRAC Bank's profit surged to Tk 1,432 crore, up from Tk 828 crore in 2023.
However, these gains were overshadowed by heavy losses in a group of loss-making banks, especially large state-owned and politically connected ones.
Bangladesh Bank report reveals the total combined net profit of the sector fell from Tk 14,840 crore in 2023 to Tk 12,128 crore in 2024. A decline of Tk 2,640 crore (18%) against the previous year's profit was seen. In the 2022-23 fiscal year, the profit was Tk 12,158 crore. Decline: Tk 2,682 crore (18%).
Bangladesh Bank takes a position that overall, despite a rising image sources, underscores how vulnerable the industry remains to external pressures, particularly from political interference. It highlights the recurring cycles of financial crises, an epidemic that has been shaped by strict regulatory measures.
Since 2022 the total banking industry's net profit has been on a downward trend. A detailed review of annual financial reports, carrying out on-site inspections of loan portfolios. As a result, many have resorted to "creative" practices, such as the non-performance of loans, which forced them to get some pure percentage from profits to secure loan deals.
As of late, banks of all sizes have been making big profits by underreporting defaults. For years, when Bangladesh Bank spoiled much of their declared profit...
It's been a long time since we saw the first time the banking sector has had a profit decrease. The ... as the ... Bangladesh Bank data shows the ... stage shocks in the last 10 years.
Both deposits and lending have fallen.
The balance is Tk 5,628 crore as irregularities in several breaks, coupled with liquidity short-ages across multiple...
Even the non-bank loans... while the interest on loans are low. The interest capped at 9 percent. Tk 2,422 plunged to Tk 4,660 crore. Loss Tk 2,238 crore (from a Tk) 2024 Political Lending Fallout. The latest decline was caused by political lending and loan defaults in banks with weak assets, where Sheikh Hasina administration... interest loans on policy-based and private loans dropped from a profit of Tk 7,682 crore... to a loss of Tk 2,238 crore. The total decline in profits from Tk 14,840 crore in 2023, but the streak ended in 2024.
According to economists and bank analysts, the data shows that a handful of banks are responsible for the bulk of the profit losses.
In fact, some critics of this profit slump had already predicted its major consequences, including Bavioan, S Alam, and Sonali. All three banks had a profit of Tk 2,752 crore.
National Bank: Lost Tk 1,706 crore, partly due to hidden defaults and mismanagement. Janata Bank: Lost Tk 522 crore, Sonali Bank: Lost Tk 445 crore, Basic Bank: Lost Tk 396 crore, Agrani Bank: Lost Tk 293 crore, Rupali Bank: Lost Tk 121 crore, Agrani Bank: Lost Tk 21 crore. Together, these troubled banks reported Tk 2,121 crore in losses. The profit has also been a loss for state-owned banks.
Selling to S Hossain, former chairman of the Association of Bankers, Bangladesh (ABB) who said that "bank loans" have been given to businessmen and politicians for voting for many years, even for a Tk... The bank loans have to be taken under a lot of pressure till now. The reality is now that they use...
Despite their profit, despite the large-wide slump, several banks have been doing good business. Let's take a look at their... Let's take a look at their biggest profit, big feast to the industry. HSBC: Tk 3,860 crore profit, United Bank: Tk 1,145 crore profit, Islami Bank: Tk 1,023 crore, City Bank: Tk 1,140 crore profit, almost double as 2023 figure of Tk 640 crore. Exim Bank: Tk 750 crore profit. United Bank: Tk 1,145 crore profit (up from Tk 454 crore). Agrani Bank: Tk 745 crore profit (up from Tk 454 crore). Among state-owned commercial banks, only one has made a profit of Tk 60 crore, though at modest levels compared to private and foreign players.
Why Foreign Banks are Doing Better? Banking analysts point out that foreign banks have professional expertise and strong governance, which are lacking in local banks, where political pressure, credit risk management, diversified client portfolios, stronger internal controls, and better risk management are a real problem.
This credit loss contrasts sharply with many local banks that are plagued by defaults and... lending, and political interference. The recent decline is the political influence over lending decisions. The banks are weak and the profit loss is largely due to non-performing loans extended to businessmen close to former Prime Minister Sheikh Hasina administration.
With rising defaults and falling profits, local banks have borrowed abruptly to survive, yet to lose, pushing private banks into a vicious cycle of borrowing at low interest rates. As long as there is political interference, such cycles will repeat.
The State Bank of Bangladesh's performance in profits does not just affect banks; it causes broader economic issues. Due to the capital deficit, banks reduce risky lending to maintain adequate capital, which then impedes economic growth and job creation. With profits wiped out, banks have less room to expand credit to individuals and businesses, thereby stifling economic activity. To make it harder for banks to raise funds from capital markets, the government announced a new capital investment plan. This plan will inject capital, while others, such as the government, are now trying to inject capital.
Bad Debt: The Real Profit: The reason why the recovery process has been more complex is that net profit is calculated after solving bad debt. The bank's profit has to be solved first; it has a lot of "provisional" and "non-general" earnings. A bank's profit that's now... is up to eight months.
While Bangladesh Bank may say that "banks reported high profits" by underreporting deficits and delaying provisions. The ground reality is that they are facing a severe crisis. The report must be looked at with honesty, setting the believe of the future profitability of banks. It will depend on: Efficient recovery of bad loans, effective governance and timely provisioning.
Even the state-owned banks, improving capital adequacy ratios. Overall, the bank profits... The real issue is the bank's profitability. A bank's profit is a loss is not income, but a loan quality. Banks are earning more, but they are not the real reason. This is not the real... The real problem is not the profit, but the lack of good profits.
The 2024 decline in net profits highlights the fragile foundation of Bangladesh's banking sector. Until banks are freed from political pressure, the burden of politically influenced bad loans, stricter regulatory measures, or the lack of not increasing pressure will not be much of a gain.
